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Does Everyone Need a Revocable Living Trust?

The Revocable Living Trust is a very useful planning mechanism in estate planning. Unfortunately, some in the estate planning world pitch the need for Living Trusts for every estate plan. The better question to ask are what are your estate planning goals and does the Revocable Living Trust help you carry out those goals.

I like to think of a trust as a 'container' that actually holds title to assets. In that container you can create special instructions that state how those assets are to be used in specific situations. For example, if a one spouse has children from a former marriage 'instructions' can be written that provide lifetime income to the surviving spouse but still protect assets so the children from the first marriage can have an inheritance.

Another issue is probate avoidance. Assets titled in the Revocable Living Trust pass outside of the probate process and pass according to instructions in the trust. Probate is the court supervised transfer of property from a decedent to the designated beneficiaries. The process is normally thought as expensive and time consuming. But here are some issues to think about:

  • Probate does provide court supervision and can be reviewed by any party. That is not generally true of a private trust.
  • Although probate has costs, there are also costs associated with the Revocable Living Trust including drafting the trust and retitling assets into the trust.
  • If you are not willing to retitle assets into the Living Trust before you die, the issue of probate avoidance is lost. Upon death, probate will be needed to transfer assets from the decedent's name into the trust.
  • There may not be any assets that need to be probated. Assets that pass to designated beneficiaries such as retirement accounts (tax deferred assets such as a 401K, IRA), pay on death accounts and assets jointly titled with right of survivorship pass outside of probate even without a trust. This is why it's important for your estate planner to review all of your assets to determine how much and the kind of assets you have, how your assets are titled and have your completed designated beneficiary forms for those assets that require it.

Here are some reasons for having a Revocable Living Trust.

  • Tax planning if the amount of your assets warrants it.
  • You need special instructions to protect intended beneficiaries.
  • You have property in various states and you want to avoid probate in multiple jurisdictions.
  • You want to use the Revocable Living Trust as a means of incapacity planning.

The Revocable Living Trust is an important estate planning tool. But one method of estate planning doesn't apply to everyone. It's important to examine your assets, decide your goals, and what is the least costly and most effective means of carrying out those goals.

Edward Zetlin Law is experienced in such issues. Don't hesitate to call if you face such an issue or if you have additional questions. Edward Zetlin Law would be happy to discuss. Please contact us at 703-379-0442 or e-mail at ed@zetlinlaw.com

Community Presentations in August for Ed Zetlin. On Saturday, August 13 at the monthly 'Lunch Bunch' Ed will be presenting and available to answer questions on special needs from Noon until 2:00 pm at the Autism Society of Northern Virginia, 10467 White Granite Dr. Oakton, VA 22124.

Contact us at (703)379-0442; ed@zetlinlaw.com


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